After Long-Term Capital, Regulators
Scrutinize Banks' Ability to Back Loans

By

Paul Beckett Staff Reporter of The Wall Street Journal

Updated Oct. 1, 1998 12:27 a.m. ET

In the wake of the near-collapse of Long-Term Capital Management LP, bank regulators are scrutinizing whether their banks have sufficient collateral to back loans to borrowers that are shrouded in secrecy.

But regulators themselves concede they are constricted in doing so for a simple reason: In assessing a bank's lending prudence, they often are forced to rely on information from the bank, not the borrower, in evaluating the...